<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
NORTHWEST PIPE COMPANY
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed per Exchange Act Rules 14a-6(i)(4) and 0-11.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
<PAGE>
NORTHWEST PIPE COMPANY
12005 N. BURGARD
PORTLAND, OREGON 97203
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------
To the Shareholders of Northwest Pipe Company:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the "Annual
Meeting") of Northwest Pipe Company (the "Company") will be held on Thursday,
May 22, 1997 at the Westin Tabor, 1672 Lawrence Street, Denver, Colorado, 80202,
at 9:00 a.m., Mountain Time. The purposes of the Annual Meeting will be:
1. ELECTION OF DIRECTORS. To elect two directors, to hold office for
a term of three years or until their successors are elected and qualified
(Proposal No. 1);
2. AMENDMENT OF THE 1995 STOCK INCENTIVE PLAN. To approve and adopt
amendments to the Company's 1995 Stock Incentive Plan (Proposal No. 2);
3. RATIFICATION OF APPOINTMENT OF AUDITORS. To ratify the
appointment of Coopers & Lybrand L.L.P. as the Company's independent
auditors for the year ending December 31, 1997 (Proposal No. 3); and
4. OTHER BUSINESS. To transact such other business as may properly
come before the meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 21, 1997,
as the record date for determining shareholders entitled to notice of and to
vote at the meeting or any adjournments thereof. Only shareholders of record at
the close of business on that date will be entitled to notice of and to vote at
the Annual Meeting or any adjournments or postponements thereof.
By Order of the Board of Directors,
Brian W. Dunham
Executive Vice President,
Chief Operating Officer, Secretary and Treasurer
Portland, Oregon
April 10, 1997
IT IS IMPORTANT THE PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU
PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE DATE, SIGN AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
NORTHWEST PIPE COMPANY
12005 N. BURGARD
PORTLAND, OREGON 97203
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 22, 1997
---------------------
INTRODUCTION
GENERAL
This Proxy Statement and the accompanying 1996 Annual Report to
Shareholders is being furnished to the shareholders of Northwest Pipe Company,
an Oregon corporation (the "Company"), as part of the solicitation of proxies
by the Company's Board of Directors (the "Board of Directors") for use at the
Company's Annual Meeting to be held on Thursday, May 22, 1997 at 9:00 a.m.,
Mountain Time at the Westin Tabor, 1672 Lawrence Street, Denver, Colorado,
80202. At the Annual Meeting, shareholders will be asked to elect two members of
the Board of Directors, approve amendments to the Company's 1995 Stock Incentive
Plan, ratify the appointment by the Board of Directors of Coopers & Lybrand
L.L.P. as independent auditors of the Company for the year ending December 31,
1997, and transact such other business as may properly come before the meeting
or any adjournments or postponements thereof. This Proxy Statement, together
with the enclosed proxy card and the 1996 Annual Report to Shareholders is first
being mailed to shareholders of the Company on or about April 14, 1997.
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
The Board of Directors has fixed the close of business on March 21, 1997 as
the record date for the determination of the shareholders entitled to notice of
and to vote at the Annual Meeting. Accordingly, only holders of record of shares
of Common Stock at the close of business on such date will be entitled to vote
at the Annual Meeting, with each such share entitling its owner to one vote on
all matters properly presented at the Annual Meeting. On the record date, there
were approximately 6,403,725 shares of Common Stock then outstanding. The
presence, in person or by proxy of a majority of the total number of outstanding
shares of Common Stock entitled to vote at the Annual Meeting is necessary to
constitute a quorum at the Annual Meeting.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the Annual Meeting, the shares represented thereby will be voted in
accordance with the instructions marked thereon. EXECUTED BUT UNMARKED PROXIES
WILL BE VOTED FOR THE ELECTION OF THE TWO NOMINEES FOR ELECTION TO THE BOARD OF
DIRECTORS, FOR THE APPROVAL OF THE AMENDMENTS TO THE COMPANY'S 1995 STOCK
INCENTIVE PLAN AND FOR THE RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND
L.L.P. AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31,
1997. The Board of Directors does not know of any matters other than those
described in the Notice of Annual Meeting that are to come before the Annual
Meeting. If any other matters are properly brought before the Annual Meeting,
the persons named in the proxy will vote the shares represented by such proxy
upon such matters as determined by a majority of the Board of Directors.
Shareholders who execute proxies retain the right to revoke them at any
time prior to the exercise of the powers conferred thereby by filing a written
notice of revocation with, or by delivering a duly executed proxy bearing a
later date to, Corporate Secretary, Northwest Pipe Company, 12005 N. Burgard,
Portland, Oregon 97203, or by attending the Annual Meeting and voting in
person. All valid, unrevoked proxies will be voted at the Annual Meeting.
1
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ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
At the Annual Meeting, two directors will be elected, each for a three-year
term. Unless otherwise specified on the proxy, it is the intention of the
persons named in the proxy to vote the shares represented by each properly
executed proxy for the election of the nominees named below. The Board of
Directors believes that the nominees will stand for election and will serve if
elected as directors. However, if either of the persons nominated by the Board
of Directors fails to stand for election or is unable to accept election, the
proxies will be voted for the election of such other person as the Board of
Directors may recommend.
The Company's Articles of Incorporation and Bylaws provide that the Board
of Directors shall be composed of not less than six (6) and not more than nine
(9) directors. The Board of Directors has fixed the number of directors at six
(6). The Company's directors are divided into three classes composed of two
directors each. The term of office of only one class of directors expires each
year, and their successors are elected for terms of three years, and until their
successors are elected and qualified. There is no cumulative voting for election
of directors.
INFORMATION AS TO NOMINEES AND CONTINUING DIRECTORS
The following table sets forth the names of and certain information about
the Board of Directors' nominees for election as a director and those directors
who will continue to serve after the Annual Meeting.
DIRECTOR EXPIRATION
AGE SINCE OF TERM
--- ----- -------
NOMINEES:
Brian W. Dunhan 39 1995 1997
Wayne B. Kingsley 54 1987 1997
CONTINUING DIRECTORS:
Warren K. Kearns 67 1986 1998
Vern B. Ryles, Jr. 59 1986 1998
William R. Tagmyer 59 1986 1999
Neil R. Thornton 66 1995 1999
NOMINEES FOR DIRECTOR
BRIAN W. DUNHAM has been a director of the Company since August 1995. Mr.
Dunham served as Chief Financial Officer from 1990 until February 1997 when he
was appointed the Company's Chief Operating Officer. Mr. Dunham has served as
Vice President, Treasurer and Secretary since 1990, and became Executive Vice
President in 1995. From 1981 to 1990 he was employed by Coopers & Lybrand
L.L.P., independent accountants.
WAYNE B. KINGSLEY has been a director of the Company since 1987. Mr.
Kingsley has been a General Partner of the General Partner of InterVen II, L.P.
since 1985. Mr. Kingsley is Chairman of the Board of Directors of American
Waterways, Inc. and BIT, Inc.
CONTINUING DIRECTORS
WARREN K. KEARNS has been a director of the Company since 1986. Mr. Kearns
is currently the Principal in Warren Kearns Associates, providing consulting
services to clients in steel and steel-related industries. Mr. Kearns also
serves as a director for Erie Forge & Steel Company. Mr. Kearns was formerly
President and director of L. B. Foster Company.
2
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VERN B. RYLES has been a director of the Company since 1986. Mr. Ryles is
President and Chief Executive Officer of Poppers Supply, a manufacturer of
flavored popcorn snacks and distributor of snack foods and equipment. Mr. Ryles
is also a director of Electro Scientific Industries, a public company.
WILLIAM R. TAGMYER has been the Chairman of the Board, Director, President
and Chief Executive Officer since 1986. From 1975 to 1986, he worked for L. B.
Foster Company, another steel pipe manufacturer. Prior to 1975, Mr. Tagmyer was
employed by the U.S. Steel Corporation and FMC Corporation in the areas of
sales, marketing, product management and contract administration.
NEIL R. THORNTON has been a director of the Company since 1995. He was
previously a director of the Company from 1986 to 1993. Mr. Thornton has been
the President and Chief Executive Officer of American Steel, L.L.C., a
distributor of carbon steel products, since 1985.
BOARD OF DIRECTORS COMMITTEES AND NOMINATIONS BY SHAREHOLDERS
In December 1996, the Board of Directors established a Nominating
Committee, comprised of Messrs. Kearns, Ryles, and Thornton. Prior to that time,
the Board of Directors had acted as a nominating committee for selecting
nominees for election as directors. The Company's Bylaws also permit
shareholders to make nominations for the election of directors, if such
nominations are made pursuant to timely notice in writing to the Company's
Secretary. To be timely, notice must be delivered to, or mailed to and received
at, the principal executive offices of the Company not less than 60 days nor
more than 90 days prior to the date of the meeting, provided that at least 60
days notice or prior public disclosure of the date of the meeting is given or
made to shareholders. If less than 60 days' notice or prior public disclosure of
the date of the meeting is given or made to shareholders, notice by the
shareholder to be timely must be received by the Company not later than the
close of business on the tenth day following the date on which such notice of
the date of the meeting was mailed or such public disclosure was made. A
shareholder's notice of nomination must also set forth certain information
specified in Article III, Section 3.16 of the Company's Bylaws concerning each
person the shareholder proposes to nominate for election and nominating
shareholder.
The Board of Directors held ten (10) meetings during 1996. Each director
attended more than 75 percent of the aggregate of (1) the total number of
meetings of the Board of Directors and (2) the total number of meetings held by
all committees of the Board on which he served. The Board of Directors has an
Executive Committee, an Audit Committee, a Compensation Committee and a
Nominating Committee. The Executive Committee, comprised of Messrs. Kingsley,
Ryles and Tagmyer, exercises the authority of the Board of Directors between
meetings of the Board, subject to certain limitations. The Executive Committee
met two (2) times during 1996. The Audit Committee, comprised of Messrs. Kearns
and Thornton, oversees actions taken by the Company's independent auditors and
reviews the Company's internal audit controls. The Audit Committee met three (3)
times during 1996. The Compensation Committee, comprised of Messrs. Kingsley and
Ryles, reviews the compensation levels of the Company's employees, makes
recommendations to the Board regarding changes in compensation and administers
the Company's stock option plans. The Compensation Committee met seven (7) times
during 1996. The Nominating Committee, comprised of Messrs. Kearns, Ryles, and
Thornton, did not meet in 1996. There are no family relationships among any of
the directors or executive officers of the Company.
See "Management - Executive Compensation" for certain information regarding
compensation of directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE ELECTION OF ITS NOMINEES FOR DIRECTOR. If a quorum is present, the Company's
Bylaws provide that directors are elected by a plurality of the votes cast by
the shares entitled to vote. Abstentions and broker non-votes are counted for
purposes of determining whether a quorum exists at the Annual Meeting, but are
not counted and have no effect on the determination of whether a plurality
exists with respect to a given nominee.
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MANAGEMENT
EXECUTIVE OFFICERS
Information with respect to the Company's current executive officers is set
forth below. Officers of the Company are elected by the Board of Directors and
hold office until their successors are elected and qualified.
NAME AGE CURRENT POSITION(S) WITH COMPANY
- ---- --- --------------------------------
William R. Tagmyer 59 Chairman of the Board, President and
Chief Executive Officer
Brian W. Dunham 39 Director, Executive Vice President,Chief
Operating Officer, Secretary and
Treasurer
Gary A. Stokes 45 Vice President - Sales and Marketing
Charles L. Koenig 54 Vice President, General Manager - Water
Transmission Division
Terrence R. Mitchell 41 Vice President, General Manager - Tubular
Products Division
John D. Murakami 43 Vice President, Chief Financial Officer
Shirley J. Evans 62 Vice President - Human Resources
Information concerning the principal occupations of Messrs. Tagmyer and
Dunham is set forth under "Election of Directors".
GARY A. STOKES has been Vice President - Sales and Marketing since 1993. He
has been with the Company since 1987. Mr. Stokes was previously employed by L.
B. Foster Company for eleven years. He served as the Regional Manager
responsible for L.B. Foster Company's West Coast sales operations.
CHARLES L. KOENIG was named Vice President, General Manager of the
Company's Water Transmission Division in February 1997 and had served as Vice
President - California Operations since 1993. Additionally, Mr. Koenig was named
President of Thompson Pipe and Steel Company, a subsidiary of the Company, in
May 1996. He has been with the Company since 1992 and is a registered
Professional Engineer. Previously, he was Operations Manager with Thompson Pipe
and Steel Company, where he was employed for more than twenty years.
TERRENCE R. MITCHELL was named Vice President, General Manager of the
Company's Tubular Products Division in May 1996, and had served as Vice
President and General Manager - Kansas Division since 1993 and has been with the
Company since 1985. Prior to joining the Company, he was employed by Valmont
Industries, another pipe manufacturer.
JOHN D. MURAKAMI was named Vice President, Chief Financial Officer in
February 1997, and had served as Corporate Controller since September 1995.
Prior to joining the Company, he was employed by Babler Brothers, Inc., a
manufacturer of concrete pipe products.
4
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SHIRLEY J. EVANS joined the Company as Director of Human Resources in 1990
and was named Vice President - Human Resources in September 1996. Prior to
joining the Company, she worked in the human resource field in other industries
for over 10 years.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation awarded to, earned by or paid to the Company's Chief Executive
Officer and each of the four other most highly compensated executive officers of
the Company determined as of the end of the last fiscal year (hereafter referred
to as the "named executive officers") for the fiscal years ended December 31,
1996, 1995 and 1994.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
------------
STOCK
ANNUAL COMPENSATION OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) GRANTED COMPENSATION
- --------------------------- ---- ------ -------- ------- ------------
<S> <C> <C> <C> <C> <C>
William R. Tagmyer 1996 $262,992 $220,000 -- $12,539(2)
Chairman of the Board, President 1995 216,840 165,000 25,470 13,206(2)
and Chief Executive Officer 1994 195,900 89,671 -- 17,091(2)
Brian W. Dunham 1996 $168,345 $200,000 -- $4,375(3)
Director, Executive Vice 1995 138,000 125,000 42,900 4,140(3)
President, Chief Financial Officer, 1994 105,600 77,054 13,886 3,168(3)
Secretary and Treasurer (6)
Gary A. Stokes 1996 $130,400 $120,000 -- $4,586(3)
Vice President - 1995 104,400 83,000 17,160 3,148(3)
Sales & Marketing 1994 92,400 43,353 6,358 2,656(3)
Charles L. Koenig 1996 $126,000 $120,000 -- $ 4,489(4)
Vice President, General Manager - 1995 106,020 83,000 17,160 3,211(4)
Water Transmission Division 1994 100,020 38,890 6,556 33,925(4)
Terrence R. Mitchell 1996 $88,500 $80,000 -- $39,512(5)
Vice President, General Manager - 1995 72,000 39,000 17,160 2,160(5)
Tubular Products Division
</TABLE>
(1) Paid pursuant to the Company's discretionary bonus program, in which all
salaried employees are eligible to participate.
(2) Represents $7,789, $8,586 and $12,684 of Company-paid life insurance in
1996, 1995 and 1994, respectively, and $4,750, $4,620 and $4,407, of
matching amounts contributed to the Company's 401(k) plan in 1996, 1995 and
1994, respectively.
(3) Represents matching amounts contributed to the Company's 401(k) plan in
1996, 1995 and 1994.
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(4) Represents $4,489, $3,211 and $2,875 of matching amounts contributed to
the Company's 401(k) plan in 1996, 1995 and 1994, respectively, and $31,050
of relocation expenses in 1994.
(5) Represents $35,559 of relocation expenses in 1996, $3,953 and $2,160 of
matching amounts contributed to the Company's 401(k) plan in 1996 and 1995.
Amounts paid to Mr. Mitchell for salary and bonus did not exceed $100,000
in 1994.
(6) Mr. Dunham served as Chief Financial Officer from 1990 until February 1997,
when he was appointed the Company's Chief Operating Officer. Mr. Dunham
remains Executive Vice President, Secretary and Treasurer.
STOCK OPTIONS
No options were granted to any of the named executive officers during
fiscal year 1996 under the Company's stock option plans. The grant of options to
the named executive officers is subject to the discretion of the Compensation
Committee.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table sets forth, for each of the named executive officers,
the aggregate dollar value realized upon exercise of stock options in 1996 and
the number and value of unexercised options as of December 31, 1996:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES (1) DECEMBER 31, 1996 AT DECEMBER 31, 1996 (2)
ACQUIRED VALUE -------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William R. Tagmyer -- -- 7,722 18,018 $ 88,571 $206,666
Brian W. Dunham -- -- 50,477 30,030 723,652 344,444
Gary A. Stokes -- -- 35,234 12,012 520,297 137,778
Charles L. Koenig -- -- 20,283 12,012 289,856 137,778
Terrence R. Mitchell 2,000 $27,220 8,296 12,012 107,055 137,778
</TABLE>
(1) The value realized on options exercised was calculated based on the net
amount received per share from the sale of shares of stock minus the
exercise price of the options.
(2) The value of unexercised in-the-money options is calculated based on the
closing price of the Company's Common Stock on December 31, 1996, $16.25
per share. Amounts reflected are based on the assumed value minus the
exercise price and do not necessarily indicate that the optionee sold such
stock.
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DIRECTOR COMPENSATION
The members of the Company's Board of Directors are reimbursed for their
travel expenses incurred in attending Board meetings. In addition, nonemployee
members of the Board of Directors receive a $10,000 annual retainer, $1,000 for
each Board meeting attended, $500 for each telephonic Board meeting attended and
$500 for each meeting of a committee of the Board attended. Total compensation
paid during the year ended December 31, 1996 was $93,500. The Company has
adopted the 1995 Stock Option Plan for Nonemployee Directors (the "1995
Nonemployee Director Plan"), which provides that an option to purchase 5,000
shares of Common Stock is granted to each new nonemployee director at the time
such person is first elected or appointed to the Board of Directors. In
addition, each nonemployee director receives an option to purchase 2,000 shares
of Common Stock annually after each annual meeting of shareholders. The number
of options which may be granted under the 1995 Nonemployee Director Plan in any
fiscal year may not exceed 20,000, subject to stock splits and similar events,
and a total of 100,000 shares of Common Stock have been reserved for issuance
upon exercise of stock options granted under the 1995 Nonemployee Director Plan.
On May 14, 1996 options to purchase 2,000 shares of Common Stock, at $17.125
each, were granted to each of Messrs. Kingsley, Kearns, Ryles and Thornton.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The Compensation Committee of the Board of Directors is comprised of
Messrs. Kingsley and Ryles. The Company leases substantially all of its
Portland, Oregon facilities from Multnomah Land & Equipment Company, a
partnership in which Mr. Ryles is a general partner. See "Certain Relationships
and Related Transactions." The Compensation Committee is responsible for
establishing the compensation of William R. Tagmyer, the Company's President and
Chief Executive Officer, who also serves on the Board of Directors. Mr. Tagmyer
is responsible for reviewing the compensation levels of the Company's other
executive officers and makes recommendations to the Compensation Committee
regarding changes in compensation.
COMPENSATION REPORT OF THE COMPENSATION COMMITTEE
COMPENSATION COMMITTEE REPORT
Under rules established by the Securities and Exchange Commission (the
"SEC"), the Company is required to provide certain data and information with
regard to the compensation and benefits provided to the Company's Chief
Executive Officer and the four other most highly compensated executive officers.
In fulfillment of this requirement, the Compensation Committee has prepared the
following report for inclusion in this Proxy Statement.
EXECUTIVE COMPENSATION PHILOSOPHY
The Compensation Committee is composed entirely of nonemployee, outside
directors and is responsible for setting and monitoring policies governing
compensation of executive officers. The Compensation Committee reviews the
performance and compensation levels for executive officers, and sets salary and
bonus levels and option grants under the Company's stock option plans. The
objectives of the Committee are to correlate executive compensation with the
Company's business objectives and performance and to enable the Company to
attract, retain and reward executive officers who contribute to the long-term
success of the Company.
The Omnibus Budget Act of 1993 added Section 162(m) to the Internal Revenue
Code of 1986, which limits to $1,000,000 the deductibility of compensation
(including stock-based compensation) individually paid to a publicly-held
Company's chief executive officer and the four other most highly compensated
executive officers. The Board of Directors and the Compensation Committee intend
to take the necessary steps to structure executive compensation policies to
comply with this limit on deductibility of executive compensation.
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SALARIES. Salaries for executive officers are based on a review of
salaries for similar positions requiring similar qualifications. In determining
executive officer salaries, the Compensation Committee reviews recommendations
from management which include information from salary surveys. Additionally, the
Compensation Committee establishes both financial and operational based
objectives and goals. These goals and objectives include sales and spending
forecasts, along with published executive compensation literature for comparable
sized companies. The Compensation Committee considers not only the performance
evaluations of executive officers but also reviews the financial condition of
the Company in setting salaries.
The Compensation Committee annually assesses the performance and sets the
salary of the Company's President and Chief Executive Officer, William R.
Tagmyer. Mr. Tagmyer annually assesses the performance of all other executive
officers and recommends salary increases which are reviewed and approved by the
Compensation Committee.
BONUS AWARDS. The Compensation Committee administers a bonus plan to
provide additional incentives to executives who meet established performance
goals for the Company. In consultation with the Chief Executive Officer, the
Compensation Committee annually determines the total amount of cash bonuses
available for executive officers and certain other management employees. In
fiscal 1996, awards under this bonus plan were contingent upon the Company's
attainment of revenue and operating profit targets, set by the Compensation
Committee in consultation with the Chief Executive Officer. The target amount of
the bonus for the Chief Executive Officer and senior executive officers was set
by the Compensation Committee. Awards are weighted so that proportionately
higher awards are received when the Company's performance reaches maximum
targets, proportionately smaller awards are received when the Company's
performance reaches minimum targets and no awards are made when the Company does
not meet minimum performance targets.
STOCK OPTIONS. The Compensation Committee believes that employee equity
ownership provides significant motivation to executive officers to maximize
value for the Company's shareholders and, therefore, periodically grants stock
options under the Company's stock option plans. Stock options are granted at the
current market price and will only have value if the Company's stock price
increases over the exercise price. The Compensation Committee determines the
size and frequency of option grants for executive officers, after consideration
of recommendations from the Chief Executive Officer. Recommendations for option
grants are based upon the relative position and responsibilities of each
executive officer, expected contributions of each officer to the Company and
previous option grants to such executive officers.
CHIEF EXECUTIVE OFFICER COMPENSATION. Mr. Tagmyer's 1996 base salary and
annual bonus were determined in the same manner as the other executives as
described in SALARIES and BONUS AWARDS above. The Compensation Committee
approved Mr. Tagmyer's 1996 annual base salary of approximately $263,000, based
on the salary survey data referred to above and compensation levels of
President/Chief Executive Officers of comparable size companies in industries
similar to the Company's. The additional cash bonus received by Mr. Tagmyer of
$220,000 was based on the Company's attainment of revenue and operating profit
targets in 1996. No options to purchase shares of the Company's Common Stock
were granted to Mr. Tagmyer in 1996.
COMPENSATION COMMITTEE
Wayne B. Kingsley
Vern B. Ryles, Jr.
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STOCK PERFORMANCE GRAPH
The SEC requires that registrants include in their proxy statement a
line-graph presentation comparing cumulative five-year shareholder returns on an
indexed basis, assuming a $100 initial investment and reinvestment of dividends,
of (a) the registrant, (b) a broad-based equity market index and (c) an
industry-specific index. The Company's Common Stock began trading on the Nasdaq
Stock Market on November 30, 1995. Accordingly, the following graph includes the
required information from November 30, 1995 through the end of the last fiscal
year (December 31, 1996). The broad-based market index used is the Nasdaq U.S.
Stock Market Total Return Index and the industry-specific index used is a peer
group of companies consisting of Ameron, Inc., Lindsay Manufacturing Co.,
Valmont Industries, Inc., L.B. Foster Company and Maverick Tube Corporation.
[GRAPH]
NOVERMBER 30, DECEMBER 31, DECEMBER 31,
COMPANY NAME/INDEX 1995 1995 1996
------------------ ---- ---- ----
Northwest Pipe Company $100 $122.05 $180.30
Nasdaq U.S. Index $100 $ 99.48 $122.37
Peer Group Index $100 $104.53 $168.93
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors and executive officers and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file initial reports of ownership and reports of changes
in ownership of shares with the Securities and Exchange Commission. Such persons
also are required to furnish the Company with copies of all Section 16(a)
reports they file.
Based solely on its review of the copies of such reports received by it
with respect to 1996, or written representations from certain reporting persons,
the Company believes that all filing requirements applicable to its directors,
officers and persons who own more than ten percent of a registered class of the
Company's equity securities have been complied with for 1996, except for Mr.
Kingsley and Mr. Thornton, both of whom filed a Form 4, for the granting of
options to each of them in May 1996, late.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 1, 1982, the Company entered into a Lease Agreement with
Multnomah Land & Equipment Company ("Multnomah Land"), a partnership in which
Vern B. Ryles, Jr., a director of the Company, is a general partner. The Lease
Agreement covers substantially all of the Company's Portland, Oregon facilities.
The term of this Lease Agreement ends December 1, 2008. The amounts paid by the
Company to Multnomah Land under this Lease were $344,000 in each of the years
ended December 31, 1996 and 1995. The Company believes that the terms of its
lease with Multnomah Land are no less favorable than could be obtained from an
unaffiliated third party. Additionally, the Company has an option to acquire the
property covered by this Lease, exercisable at any time prior to the expiration
of the Lease. The Company intends to exercise its option to acquire the property
covered by this Lease in 1997. The purchase price payable by the Company upon
exercise of this option would equal the greater of $1,000,000 or the outstanding
balance of the unpaid principal and accrued interest on the loan collateralized
by such property ($2.7 million at December 31, 1996). The Company and Multnomah
Land are co-makers on a Deed of Trust Note evidencing this loan. In addition,
Multnomah Land has unconditionally guaranteed all of the obligations of the
Company to The CIT Group under a Financing Agreement dated May 31, 1996.
Multnomah Land's guarantee was required because it is a related party with
ownership rights to the Company's Portland, Oregon facilities.
10
<PAGE>
STOCK OWNED BY MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The table below sets forth certain information, as of February 28, 1997,
regarding the beneficial ownership of the Common Stock by: (i) each person known
by the Company to be the beneficial owner of 5% or more of its outstanding
Common Stock, (ii) each of the named executive officers, (iii) each of the
Company's directors and (iv) all directors and executive officers as a group:
SHARES BENEFICIALLY
OWNED(1)
--------
NAME OF BENEFICIAL OWNER SHARES PERCENT
------------------------ ------ -------
InterVen II, L.P 1,048,123 16.4%
InterVen Ventures 1987
Wayne B. Kingsley(2)
227 S.W. Pine Street
Portland, OR 97204
Lutheran Brotherhood (3) 594,000 9.3
625 Fourth Avenue, 10th Floor
Minneapolis, MN 55415
Harris Associates, Inc. (4) 400,000 6.2
Harris Associates L.P.
2 North LaSalle Street
Chicago, IL 60602
U.S. Bancorp (5) 373,800 5.8
111 SW Fifth Avenue, Suite 3500
Portland, OR 97204
William R. Tagmyer 273,970 4.3
Brian W. Dunham 89,115 1.3
Gary A. Stokes 56,686 *
Charles L. Koenig 57,123 *
Terrence R. Mitchell 9,740 *
Warren K. Kearns 2,000 *
Vern B. Ryles, Jr. 9,479 *
Neil R. Thornton 13,378 *
All directors and executive officers as a
group, (eleven persons) 1,563,167 23.8%
- ----------
(*) Represents beneficial ownership of less than one percent of the
outstanding Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, and includes voting power and
investment power with respect to shares. Shares issuable upon the
exercise of outstanding stock options that are currently exercisable
or become exercisable within 60 days from February 28, 1997 are
considered outstanding for the purpose of calculating the percentage
of Common Stock owned by such person but not for the purpose of
calculating the percentage of Common Stock owned by any other person.
The number of stock options that are exercisable within 60 days of
February 28, 1997 is as follows: Mr. Kingsley - 2,000; Mr. Kearns -
2,000; Mr. Ryles - 9,479; Mr. Thornton - 8,876; Mr. Tagmyer - 11,038;
Mr. Dunham - 54,170; Mr. Stokes - 36,778; Mr. Koenig - 21,827; Mr.
Mitchell - 9,740; and all directors and officers as a group - 156,816.
11
<PAGE>
(2) Mr. Kingsley is a director of the Company and a General Partner of the
General Partner of InterVen II, L.P., and Interven Ventures 1987. A
schedule 13G filed with the Securities and Exchange Commission on
February 14, 1997 states that Jonathan E. Funk, Kenneth M. Deemer,
Wayne B. Kingsley, David B. Jones and Keith P. Larson, each of whom is
a General Partner of the General Partner of InterVen II, L.P. and
InterVen Ventures 1987, share voting and dispositive power with
respect to 1,046,123 shares of Common Stock.
(3) Based on information provided to the Company by the Lutheran
Brotherhood on April 3, 1997 as to its beneficial ownership of Common
Stock as of that date.
(4) The information as to beneficial ownership is based on Schedules 13G
filed with the Securities and Exchange Commission by Harris
Associates, Inc. and Harris Associates L.P. on February 11, 1997,
reflecting their beneficial ownership of Common Stock as of December
31, 1996. The Schedule 13G states that Harris Associates, Inc. and
Harris Associates L.P. have shared voting and dispositive power with
respect to 400,000 shares of Common Stock.
(5) The information as to beneficial ownership is based on a Schedule 13G
filed with the Securities and Exchange Commission by U.S. Bancorp on
February 13, 1997, reflecting its beneficial ownership of Common Stock
as of December 31, 1996. The Schedule 13G states that U.S. Bancorp has
sole voting power with respect to 357,600 shares of Common Stock, sole
dispositve power with respect to 180,700 shares of Common Stock and
shared dispositive power with respect to 4,500 shares of Common Stock.
APPROVAL OF AMENDMENTS TO 1995 STOCK INCENTIVE PLAN
(PROPOSAL NO. 2)
The Company maintains its 1995 Stock Incentive Plan (the "1995 Plan") to
provide incentives to the Company's key employees and others who provide
services to the Company. The Board of Directors believes that the availability
of stock incentives is an important factor in the Company's ability to attract
and retain the best available personnel for positions of substantial
responsibility and to provide an incentive for them to exert their best efforts
on behalf of the Company. A total of 429,000 shares of Common Stock have been
reserved for issuance under the 1995 Plan. As of March 31, 1997, only 128,034
shares remained available for grant under the 1995 Plan. The Board of Directors
believes that additional shares will be needed under the 1995 Plan to provide
appropriate incentives to employees and others. Accordingly, the Board of
Directors has approved, and recommends shareholder adoption of, an amendment to
the 1995 Plan that would increase from 429,000 shares to 629,000 shares the
number of shares of Common Stock that are reserved for issuance under the 1995
Plan. The Board of Directors has also approved, and recommends shareholder
adoption of, amendments to the 1995 Plan to conform its provisions to certain
requirements of the regulations promulgated under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code") and certain other amendments that
principally relate to the elimination of certain restrictions in the 1995 Plan
that are no longer necessary or appropriate based on recent changes to the rules
promulgated by the Securities and Exchange Commission under Section 16 of the
Securities Exchange Act of 1934.
SUMMARY OF 1995 STOCK INCENTIVE PLAN
The following discussion is intended only as a summary of the material
provisions of the 1995 Plan. Shareholders are encouraged to review the complete
copy of the 1995 Plan, which is included herein as Exhibit A and marked to
indicate the proposed amendments, before voting on this proposal.
12
<PAGE>
The 1995 Plan, which was approved by the Company's shareholders on
August 8, 1995, provides for grants of both "incentive stock options" within the
meaning of Section 422 of the Code and "non-qualified stock options" which are
not qualified for treatment under Section 422 of the Code, and for direct stock
grants and sales to employees or consultants of the Company. As of March 31,
1997, approximately 672 persons were eligible to participate in the 1995 Plan.
In addition, the 1995 Plan has been amended to include nonemployee directors
within the definition of "consultant," making such persons eligible to
participate in the 1995 Plan. Because the directors, officers and employees of
the Company who may participate in the 1995 Plan and the amount of their options
will be determined by the Compensation Committee in its discretion, it is not
possible to state the names or positions of, or the number of options that may
be granted to, the Company's directors, officers and employees. However, as
amended, no employee may receive options under the 1995 Plan for more than
100,000 shares of Common Stock in any one fiscal year, except that options for
up to an additional 100,000 shares of Common Stock may be granted in connection
with a person's initial employment with the Company.
The administration of the 1995 Plan has been delegated to the Compensation
Committee of the Board of Directors (the "Committee"). In addition to
determining who will be granted options, the Committee has the authority and
discretion to determine when options will be granted and the number of options
to be granted and whether the options will be incentive stock options or
non-qualified stock options. Only "employees" of the Company as that term is
defined in the Code will be entitled to receive Incentive Stock Options. See
"Federal Income Tax Consequences" below. The Committee also may determine the
time or times when each option becomes exercisable, the duration of the exercise
period for options and the form or forms of the instruments evidencing options
granted under the Plan. The Committee also may construe the Plan and the
provisions in the instruments evidencing options granted under the Plan to
participants and is empowered to make all other determinations deemed necessary
or advisable for the administration of the Plan.
The term of each option granted under the 1995 Plan will be ten years from
the date of grant, or such shorter period as may be established at the time of
the grant. An option granted under the 1995 Plan may be exercised at such times
and under such conditions as determined by the Compensation Committee. If a
person who has been granted an option ceases to be an employee or consultant of
the Company, such person may exercise that option only during the three month
period after the date of termination, and only to the extent that the option was
exercisable on the date of termination. If a person who has been granted an
option ceases to be an employee or consultant as a result of such person's total
and permanent disability, such person may exercise that option at any time
within twelve months after the date of termination, but only to the extent that
the option was exercisable on the date of termination. The 1995 Plan has been
amended to provide that, except as otherwise provided by the Compensation
Committee at the time an option is granted, no option granted under the 1995
Plan is transferable other than at death, and each option is exercisable during
the life of the optionee only by the optionee. In the event of the death of a
person who has received an option, the option generally may be exercised by a
person who acquired the option by bequest or inheritance during the twelve month
period after the date of death to the extent that such option was exercisable at
the date of death.
The exercise price of incentive stock options granted under the 1995 Plan
may not be less than the fair market value of a share of Common Stock on the
date of grant of the option. For non-qualified stock options, the 1995 Plan has
been amended to provide that the exercise price may be less than, equal to, or
greater than the fair market value of the Common Stock on the date of grant,
provided that the Compensation Committee must specifically determine that any
option grant at an exercise price less than fair market value is in the best
interests of the Company. The consideration to be paid upon exercise of an
option, including the method of payment, will be determined by the Compensation
Committee and may consist entirely of cash, check, shares of Common Stock, such
other consideration and method of payment permitted by applicable law or any
combination of such methods of payment as permitted by the Compensation
Committee. The Compensation Committee has the authority to reset the price of
any stock option after the original grant and before exercise. In the event of
stock dividends, splits, and similar capital changes, the 1995 Plan provides for
appropriate adjustments in the number of shares available for option and the
number and option prices of shares subject to outstanding options.
13
<PAGE>
In the event of a proposed sale of all or substantially all of the assets
of the Company, or a merger of the Company with and into another corporation,
outstanding options shall be assumed or equivalent options shall be substituted
by such successor corporation, unless the Committee provides all option holders
with the right to immediately exercise all of their options, whether vested or
unvested. In the event of a proposed dissolution or liquidation of the Company,
outstanding options will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. In such a situation,
the Board is authorized to give option holders the right to immediately exercise
all of their options, whether vested or unvested.
The 1995 Plan will continue in effect until June 2005, unless earlier
terminated by the Board of Directors, but such termination will not affect the
terms of any options outstanding at that time. The Board of Directors may
amend, terminate or suspend the 1995 Plan at any time. Amendments to the 1995
Plan must be approved by shareholders if required by applicable tax, securities
or other law or regulation.
The issuance of shares of Common Stock upon the exercise of options is
subject to registration with the Securities and Exchange Commission of the
shares reserved by the Company under the 1995 Plan.
FEDERAL INCOME TAX CONSEQUENCES
The federal income tax discussion set forth below is included for general
information only. Optionees are urged to consult their tax advisors to determine
the particular tax consequences applicable to them, including the application
and effect of foreign, state and local income and other tax laws.
INCENTIVE STOCK OPTIONS. Certain options authorized to be granted under
the 1995 Plan are intended to qualify as incentive stock options for federal
income tax purposes. Under federal income tax law currently in effect, the
optionee will recognize no income upon grant or upon a proper exercise of an
incentive stock option. If an employee exercises an incentive stock option and
does not dispose of any of the option shares within two years following the date
of grant and within one year following the date of exercise, then any gain
realized upon subsequent disposition of the shares will be treated as income
from the sale or exchange of a capital asset. If an employee disposes of shares
acquired upon exercise of an incentive stock option before the expiration of
either the one-year holding period or the two-year waiting period, any amount
realized will be taxable as ordinary compensation income in the year of such
disqualifying disposition to the extent that the lesser of the fair market value
of the shares on the exercise date or the proceeds of the sale of the shares
exceeds the exercise price.
NON-QUALIFIED STOCK OPTIONS. Certain options authorized to be granted
under the 1995 Plan will be treated as non-qualified stock options for federal
income tax purposes. Under federal income tax law presently in effect, no income
is realized by the grantee of a non-qualified stock option pursuant to the 1995
Plan until the option is exercised. At the time of exercise of a non-qualified
stock option, the optionee will realize ordinary compensation income, and the
Company will be entitled to a deduction, in the amount by which the market value
of the shares subject to the option at the time of exercise exceeds the exercise
price. Upon the sale of shares acquired upon exercise of a non-qualified stock
option, the excess of the amount realized from the sale over the market value of
the shares on the date of exercise will be taxable.
CONSEQUENCES TO THE COMPANY. The Company recognizes no deduction at the
time of grant or exercise of an incentive stock option. The Company will
recognize a deduction at the time of exercise of a non-qualified stock option on
the difference between the option price and the fair market value of the shares
on the date of grant. The Company also will recognize a deduction to the extent
the optionee recognizes income upon a disqualifying disposition of shares
underlying an incentive stock option.
Under Section 162(m) of the Code, publicly-held companies may be limited as
to income tax deductions to the extent total remuneration (including
compensation received through the exercise of stock options) for certain
executive officers exceeds $1 million in any one year. However, Section 162(m)
provides an exception for "performance-based" remuneration, including stock
options. Section 162(m) requires that certain actions must be taken by a
compensation committee of two or more outside directors and that the material
terms of such
14
<PAGE>
remuneration must be approved by a majority vote of the shareholders in order
for stock options to qualify as "performance-based" remuneration. The
regulations adopted pursuant to Section 162(m) which establish the requirements
for options to be treated as "performance-based" remuneration require stock
option plans to set forth the maximum number of options that may be awarded to
any employee in any one year. Accordingly, the Board of Directors approved an
amendment to the 1995 Plan to establish a limitation on the number of options
that may be awarded to any employee under the 1995 Plan in any calendar year of
100,000, except that options for up to an additional 100,000 shares may be
granted in connection with a person's initial employment with the Company. If
the proposed amendments to the 1995 Plan are not approved, stock options granted
under the 1995 Plan will not qualify as "performance-based" remuneration under
Section 162(m).
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL. For
the reasons discussed above, the Board recommends a vote FOR approval of the
amendments to the Company's 1995 Stock Incentive Plan. If a quorum is present,
the Company's Bylaws provide that this proposal will be approved if a majority
of the votes cast on the proposal are voted in favor of approval. Abstentions
and broker non-votes are counted for purposes of determining whether a quorum
exists at the Annual Meeting but are not counted and have no effect on the
determination of the outcome of this proposal.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL NO. 3)
The Board of Directors has appointed Coopers & Lybrand L.L.P., independent
accountants, as auditors of the Company for the year ending December 31, 1997,
subject to ratification by the shareholders.
Unless otherwise indicated, properly executed proxies will be voted in
favor of ratifying the appointment of Coopers & Lybrand L.L.P. to audit the
books and accounts of the Company for the year ending December 31, 1997. No
determination has been made as to what action the Board of Directors would take
if the shareholders do not ratify the appointment.
A representative of Coopers & Lybrand L.L.P. is expected to be present at
the Annual Meeting. The representative will be given the opportunity to make a
statement on behalf of his firm if such representative so desires, and will be
available to respond to any appropriate questions of any shareholder. Coopers &
Lybrand L.L.P. was the Company's independent accountant for the year ended
December 31, 1996.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL. If
a quorum is present the Company's Bylaws provide that ratification of this
proposal will be approved if the votes cast by the shareholders entitled to vote
favoring the ratification exceeds the votes cast opposing the ratification.
Abstentions and broker non-votes are counted for purposes of determining whether
a quorum exists at the Annual Meeting, but are not counted and have no effect on
the determination of the outcome of this proposal.
15
<PAGE>
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Any shareholder proposal intended for inclusion in the proxy statement and
form of proxy relating to the Company's 1998 annual meeting of shareholders must
be received by the Company not later than December 15, 1998, pursuant to the
proxy soliciting regulations of the SEC. In addition, the Company's Bylaws
require that notice of shareholder proposals and nominations for director be
delivered to the Secretary of the Company not less than 60 days nor more than 90
days prior to the date of an annual meeting, unless notice or public disclosure
of the date of the meeting occurs less than 60 days prior to the date of such
meeting, in which event, shareholders may deliver such notice not later than the
tenth day following the day on which notice of the date of the meeting was
mailed or public disclosure thereof was made. Nothing in this paragraph shall be
deemed to require the Company to include in its proxy statement and form of
proxy for such meeting any shareholder proposal which does not meet the
requirements of the SEC in effect at the time.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
know of any other matters to be presented for action by the shareholders at the
1997 Annual Meeting. If, however, any other matters not now known are properly
brought before the meeting, the persons named in the accompanying proxy will
vote such proxy in accordance with the determination of a majority of the Board
of Directors.
COST OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition to
use of the mails, proxies may be solicited personally or by telephone by Chase
Mellon Shareholder Services, at an approximate cost of $1,000, or by directors,
officers and employees of the Company, who will not be specially compensated for
such activities. Such solicitations may be made personally, or by mail,
facsimile, telephone telegraph or messenger. The Company will also request
persons, firms and companies holding shares in their names or in the name of
their nominees, which are beneficially owned by others, to send proxy materials
to and obtain proxies from such beneficial owners. The Company will reimburse
such persons for their reasonable expenses incurred in that connection.
ADDITIONAL INFORMATION
A copy of the Company's Annual Report to Shareholders for the year ended
December 31, 1996 accompanies this Proxy Statement. The Company will provide,
without charge on the written request of any beneficial owner of shares of the
Company's Common Stock entitled to vote at the Annual Meeting, a copy of the
Company's Annual Report on Form 10-K as filed with the SEC for the year ended
December 31, 1996. Written requests should be mailed to the secretary, Northwest
Pipe Company, 12005 N. Burgard, Portland, OR 97203.
By Order of the Board of Directors,
Brian W. Dunham
Executive Vice President, Chief Operating Officer,
Secretary and Treasurer
Dated: April 10, 1997
16
<PAGE>
APPENDIX A
NORTHWEST PIPE [& CASING] COMPANY
AMENDED 1995 STOCK INCENTIVE PLAN*
1. PURPOSES OF THE PLAN.
The purposes of this Stock Incentive Plan are to attract and retain the
best available personnel for positions of substantial responsibility, to provide
additional incentive to the Employees and Consultants of the Company and to
promote the success of the Company's business.
Options granted hereunder may be either "incentive stock options," as
defined in Section 422 of the Internal Revenue Code of 1986, as amended, or
"nonqualified stock options," at the discretion of the Board and as reflected in
the terms of the written option agreement. In addition, shares of the Company's
Common Stock may be Sold hereunder independent of any Option grant.
2. DEFINITIONS.
As used herein, the following definitions shall apply:
2.1 "ADMINISTRATOR" shall mean the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 0 of the Plan.
2.2 "BOARD" shall mean [the Committee, if one has been appointed, or] the
Board of Directors of the Company[, if no Committee is appointed].
2.3 "CODE" shall mean the Internal Revenue Code of 1986, as amended.
2.4 "COMMITTEE" shall mean a Committee appointed by the Board in accordance
with Section 0 of the Plan.
2.5 "COMMON STOCK" shall mean the Class B Common Stock of the Company.
2.6 "COMPANY" shall mean Northwest Pipe [& Casing] Company, an Oregon
corporation.
2.7 "CONSULTANT" shall mean any person who is engaged by the Company or
any PARENT OR Subsidiary to render consulting services and is compensated for
such consulting services AND ANY DIRECTOR OF THE COMPANY WHETHER COMPENSATED FOR
SUCH SERVICES OR NOT.[, provided that the term "Consultant" shall not include
Directors who are only paid a director's fee or who are not compensated by the
Company for their services as Directors.]
- --------------
*NOTE: Material in BOLDFACE (other than headings) is new, and material in
[brackets] has been deleted.
<PAGE>
2.8 "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" shall mean the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of: (i) any sick leave, military leave, or
any other leave of absence approved by the COMPANY [Board]; provided, however,
that for purposes of Incentive Stock Options, any such leave is for a period of
not more than ninety days or reemployment upon the expiration of such leave is
guaranteed by contract or statute, PROVIDED FURTHER, THAT ON THE NINETY-FIRST
DAY OF SUCH LEAVE (WHERE REEMPLOYMENT IS NOT GUARANTEED BY CONTRACT OR STATUTE)
THE OPTIONEE'S INCENTIVE STOCK OPTION SHALL AUTOMATICALLY CONVERT TO A
NONQUALIFIED STOCK OPTION; or (ii) transfers between locations of the Company or
between the Company, its Parent, its Subsidiaries or its successor.
2.9 "DIRECTOR" shall mean a member of the Board.
2.10 "DISABILITY" shall mean total and permanent disability as defined in
Section 22(e)(3) of the Code.
2.11 "EMPLOYEE" shall mean any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither the
payment of a director's fee by the Company nor service as a Director shall be
sufficient to constitute "employment" by the Company.
2.12 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
2.13 "INCENTIVE STOCK OPTION" shall mean an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code.
2.14 "NONQUALIFIED STOCK OPTION" shall mean an Option not intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
2.15 "NOTICE OF GRANT" shall mean a written notice evidencing certain terms
and conditions of an individual Option grant. The Notice of Grant is part of
the Option Agreement.
2.16 "OFFICER" shall mean a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
2.17 "OPTION" shall mean a stock option granted pursuant to the Plan.
2.18 "OPTION AGREEMENT" shall mean a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
2.19 "OPTIONED STOCK" shall mean the Common Stock subject to an Option.
2.20 "OPTIONEE" shall mean an Employee or Consultant who receives an
Option.
2.21 "PARENT" shall mean a "parent corporation," whether now or hereafter
existing, as defined in Section 424(E) of the Code.
2.22 "PLAN" shall mean this 1995 Stock Incentive Plan.
2.23 "RULE 16b-3" shall mean Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
<PAGE>
2.24 "SALE" or "SOLD" shall include, with respect to the sale of Shares
under the Plan, the sale of Shares for consideration in the form of cash or
notes, as well as a grant of Shares for consideration in the form of past or
future services.
2.25 "SHARE" shall mean a share of the Common Stock, as adjusted in
accordance with Section 0 of the Plan.
2.26 "SUBSIDIARY" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN.
Subject to the provisions of Section 0 of the Plan, the maximum aggregate
number of Shares which may be optioned and/or Sold under the Plan is 629,000
[429,000] shares of Common Stock. The Shares may be authorized, but unissued,
or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, become available for future
Option grants and/or Sales under the Plan; provided, however, that Shares that
have actually been issued under the Plan shall not be returned to the Plan and
shall not become available for future distribution under the Plan.
4. ADMINISTRATION OF THE PLAN.
4.1 PROCEDURE.
4.1.1 MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule 16b-3,
the Plan may be administered by different bodies with respect to Directors,
Officers who are not Directors, and Employees who are neither Directors nor
Officers.
4.1.2 ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS SUBJECT
TO SECTION 16(b). With respect to Option grants made to Employees who are
also Officers or Directors subject to Section 16(b) of the Exchange Act, the
Plan shall be administered by (A) the Board, if the Board may administer the
Plan in compliance with the rules governing a plan intended to qualify as a
discretionary plan under Rule 16b-3, or (B) a Committee designated by the
Board to administer the Plan, which Committee shall be constituted to comply
with the rules, IF ANY, governing a plan intended to qualify as a
discretionary plan under Rule 16b-3. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the Committee
and appoint additional members, remove members (with or without cause) and
substitute new members, fill vacancies (however caused), and remove all
members of the Committee and thereafter directly administer the Plan, all to
the extent permitted by the rules, IF ANY, governing a plan intended to
qualify as a discretionary plan under Rule 16b-3. With respect to persons
subject to Section 16 of the Exchange Act, transactions under the Plan are
intended to comply with all applicable conditions of Rule 16b-3. To the
extent any provision of the Plan or action by the Administrator fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Administrator.
4.1.3 ADMINISTRATION WITH RESPECT TO OTHER PERSONS. With respect to
Option grants made to Employees or Consultants who are neither Directors nor
Officers of the Company, the Plan shall be administered by the Board or a
Committee designated by the Board, which Committee shall be constituted to
satisfy the legal requirements relating to the administration of stock
option plans under state corporate and securities laws and the Code. Once
appointed, such Committee shall serve in its designated capacity until
otherwise directed by the Board. The Board may increase the size of the
Committee and appoint
<PAGE>
additional members, remove members (with or without cause) and substitute
new members, fill vacancies (however caused), and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by the legal requirements relating to the administration of stock
option plans under state corporate and securities laws and the Code.
4.2 POWERS OF THE ADMINISTRATOR. Subject to the provisions of the Plan,
and in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:
4.2.1 to grant Incentive Stock Options in accordance with Section 422
of the Code, or Nonqualified Stock Options;
4.2.2 to authorize Sales of Shares of Common Stock hereunder;
4.2.3 to determine, upon review of relevant information and in
accordance with Section 0 of the Plan, the fair market value of the Common
Stock;
4.2.4 to determine the exercise/purchase price per Share of Options to
be granted or Shares to be Sold, which exercise/purchase price shall be
determined in accordance with Section 0 of the Plan;
4.2.5 to determine the Employees or Consultants to whom, and the time
or times at which, Options shall be granted and the number of Shares to be
represented by each Option;
4.2.6 to determine the Employees or Consultants to whom, and the time
or times at which, Shares shall be Sold and the number of Shares to be Sold;
4.2.7 to interpret the Plan;
4.2.8 to prescribe, amend and rescind rules and regulations relating
to the Plan;
4.2.9 to determine the terms and provisions of each Option granted
(which need not be identical) and, with the consent of the holder thereof,
modify or amend each Option;.2.10 to determine the terms and provisions of
each Sale of Shares (which need not be identical) and, with the consent of
the purchaser thereof, modify or amend each Sale;
4.2.11 to accelerate or defer (with the consent of the Optionee) the
exercise date of any Option;
4.2.12 to accelerate or defer (with the consent of the Optionee or
purchaser of Shares) the vesting restrictions applicable to Shares Sold
under the Plan or pursuant to Options granted under the Plan;
4.2.13 to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option or Sale of Shares
previously granted or authorized by the Board;
4.2.14 to determine the restrictions on transfer, vesting
restrictions, repurchase rights, or other restrictions applicable to Shares
issued under the Plan;
4.2.15 to effect, at any time and from time to time, with the consent
of the affected Optionees, the cancellation of any or all outstanding
Options under the Plan and to grant in substitution therefor new Options
under the Plan covering the same or different numbers of Shares, but having
an Option price per Share consistent with the provisions of Section 0 of
this Plan as of the date of the new Option grant;
<PAGE>
4.2.16 to establish, on a case-by-case basis, different terms and
conditions pertaining to exercise or vesting rights upon termination of
employment, whether at the time of an Option grant or Sale of Shares, or
thereafter;
4.2.17 to approve forms of agreement for use under the Plan;
4.2.18 to reduce the exercise price of any Option to the then current
fair market value if the fair market value of the Common Stock covered by
such Option shall have declined since the date the Option was granted;
[and]
4.2.19 TO DETERMINE WHETHER AND UNDER WHAT CIRCUMSTANCES AN OPTION MAY
BE SETTLED IN CASH UNDER SUBSECTION 9.5 INSTEAD OF COMMON STOCK; AND
4.2.20 to make all other determinations deemed necessary or advisable
for the administration of the Plan.
4.3 EFFECT OF BOARD'S DECISION. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all Optionees
and any other holders of any Options granted under the Plan or Shares Sold under
the Plan.
5. ELIGIBILITY.
5.1 PERSONS ELIGIBLE. Options may be granted and/or Shares Sold only to
Employees and Consultants. Incentive Stock Options may be granted only to
Employees. An Employee or Consultant who has been granted an Option or Sold
Shares may, if he or she is otherwise eligible, be granted an additional Option
or Options or Sold additional Shares.
5.2 ISO LIMITATION. To the extent that the aggregate fair market value:
(i) of shares subject to an Optionee's Incentive Stock Options granted by the
Company, any Parent or Subsidiary, which (ii) become exercisable for the first
time during any calendar year (under all plans of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonqualified Stock Options. For purposes of this Section 0, Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the fair market value of the Shares shall be determined as of the time of grant.
5.3 SECTION 0 LIMITATIONS. Section 0 of the Plan shall apply only to an
Incentive Stock Option evidenced by an Option Agreement which sets forth the
intention of the Company and the Optionee that such Option shall qualify as an
Incentive Stock Option. Section 0 of the Plan shall not apply to any Option
evidenced by a Option Agreement which sets forth the intention of the Company
and the Optionee that such Option shall be a Nonqualified Stock Option.
5.4 NO RIGHT TO CONTINUED EMPLOYMENT. The Plan shall not confer upon any
Optionee any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with his or her
right or the Company's right to terminate his employment or consulting
relationship at any time.
5.5 OTHER LIMITATIONS. THE FOLLOWING LIMITATIONS SHALL APPLY TO GRANTS OF
OPTIONS TO EMPLOYEES:
5.5.1 NO EMPLOYEE SHALL BE GRANTED, IN ANY FISCAL YEAR OF THE
COMPANY, OPTIONS TO PURCHASE MORE THAN 100,000 SHARES.
5.5.2 IN CONNECTION WITH HIS OR HER INITIAL EMPLOYMENT, AN
EMPLOYEE MAY BE GRANTED OPTIONS TO PURCHASE UP TO AN ADDITIONAL 100,000 SHARES
WHICH SHALL NOT COUNT AGAINST THE LIMIT SET FORTH IN SUBSECTION 5.5.1 ABOVE.
<PAGE>
5.5.3 THE FOREGOING LIMITATIONS SHALL BE ADJUSTED PROPORTIONATELY
IN CONNECTION WITH ANY CHANGE IN THE COMPANY'S CAPITALIZATION AS DESCRIBED IN
SECTION 11.
5.5.4 IF AN OPTION IS CANCELED IN THE SAME FISCAL YEAR OF THE
COMPANY IN WHICH IT WAS GRANTED (OTHER THAN IN CONNECTION WITH A TRANSACTION
DESCRIBED IN SECTION 11), THE CANCELED OPTION SHALL BE COUNTED AGAINST THE
LIMITS SET FORTH IN SUBSECTIONS 5.5.1 AND 5.5.2 ABOVE. FOR THIS PURPOSE, IF THE
EXERCISE PRICE OF AN OPTION IS REDUCED, THE TRANSACTION WILL BE TREATED AS A
CANCELLATION OF THE OPTION AND THE GRANT OF A NEW OPTION.
6. TERM OF PLAN.
The Plan shall become effective upon the earlier to occur of its adoption
by the Board or its approval by the shareholders of the Company as described in
Section 0 of the Plan. It shall continue in effect for a term of ten (10)
years, unless sooner terminated under Section 0 of the Plan.
7. TERM OF OPTION.
The term of each Option shall be stated in the Notice of Grant; provided,
however, that in the case of an Incentive Stock Option, the term shall be ten
(10) years from the date of grant or such shorter term as may be provided in the
Notice of Grant. However, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive
Stock Option shall be five (5) years from the date of grant thereof or such
shorter term as may be provided in the Notice of Grant.
8. EXERCISE/PURCHASE PRICE AND CONSIDERATION.
8.1 EXERCISE/PURCHASE PRICE. The per-Share exercise/purchase price for
the Shares to be issued pursuant to exercise of an Option or a Sale shall be
such price as is determined by the Administrator, but shall be subject to the
following:
8.1.1 In the case of an Incentive Stock Option
8.1.1.1 granted to an Employee who, at the time of the
grant of such Incentive Stock Option, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of
the Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than one hundred ten percent (110%) of the fair
market value per Share on the date of the grant.
8.1.1.2 granted to any other Employee, the per Share
exercise price shall be no less than one hundred percent (100%) of the
fair market value per Share on the date of grant.
8.1.2 In the case of a Nonqualified Stock Option or Sale THE PER
SHARE EXERCISE/PURCHASE PRICE DETERMINED BY THE ADMINISTRATOR.
[8.1.2.1 granted or Sold to a person who, at the time of
the grant of such Option or authorization of such Sale, owns stock
representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per
Share exercise/purchase price shall be no less than one hundred ten
percent (110%) of the fair market value per Share on the date of the
grant or authorization of Sale, unless otherwise expressly determined
by the Administrator.
<PAGE>
8.1.2.2 granted or Sold to any other person, the per Share
exercise/purchase price shall be no less than eighty-five percent
(85%) of the fair market value per Share on the date of grant or
authorization of Sale, unless otherwise expressly determined by the
Administrator.
8.1.2.3] Any determination to ESTABLISH AN OPTION EXERCISE PRICE
OR EFFECT A SALE OF COMMON STOCK [sell stock] at less than fair market
value on the date of the OPTION grant or authorization of Sale shall
be accompanied by an express finding by the Administrator specifying
that the sale is in the best interest of the Company, and specifying
both the fair market value and the OPTION EXERCISE [grant] or S[s]le
price of the COMMON S[s]tock.
[8.1.3 In the case of an Option granted or Sale authorized on or
after the effective date of registration of any class of equity security of
the Company pursuant to Section 12 of the Exchange Act and prior to six (6)
months after the termination of such registration, the per Share
exercise/purchase price shall be no less than one hundred percent (100%) of
the fair market value per Share on the date of grant or authorization of
Sale.]
8.2 FAIR MARKET VALUE. The fair market value per Share shall be
determined by the Administrator in its discretion; provided, however, that where
there is a public market for the Common Stock, the fair market value per Share
shall be the closing price of the Common Stock (or the closing bid if no sales
were reported) for [the last market trading day prior to] the date of grant of
the Option or authorization of Sale or other determination, as reported in THE
WALL STREET JOURNAL (or, if not so reported, as otherwise reported by the
National Association of Securities Dealers Automated Quotation (NASDAQ) System)
or, in the event the Common Stock is listed on a stock exchange, the fair market
value per Share shall be the closing price on such exchange for the [last market
trading day prior to the] date of grant of the Option or authorization of Sale
or other determination, as reported in THE WALL STREET JOURNAL.
8.3 CONSIDERATION. The consideration to be paid for the Shares to be
issued upon exercise of an Option or pursuant to a Sale, including the method of
payment, shall be determined by the Administrator. In the case of an Incentive
Stock Option, the Administrator shall determine the acceptable form of
consideration at the time of grant. Such consideration may consist of:
8.3.1 cash;
8.3.2 check;
8.3.3 transfer to the Company of Shares which
8.3.3.1 in the case of Shares acquired upon exercise of an
Option, have been owned by the Optionee for more than six months on
the date of surrender, and
8.3.3.2 HAVE [having] a fair market value on the date of
surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised;
8.3.4 delivery of A PROPERLY EXECUTED EXERCISE NOTICE TOGETHER
WITH IRREVOCABLE INSTRUCTIONS TO A BROKER TO PROMPTLY DELIVER TO THE
COMPANY THE AMOUNT OF SALE OR LOAN PROCEEDS REQUIRED TO PAY THE EXERCISE
PRICE; [instructions to the Company to withhold from the Shares that would
otherwise be issued on the exercise that number of Shares having a fair
market value at the time of such exercise equal to the Option exercise
price;]
8.3.5 such other consideration and method of payment for the
issuance of Shares to the extent permitted by legal requirements relating
to the administration of stock option plans under state corporate and
securities laws and the Code; or
<PAGE>
8.3.6 any combination of the foregoing methods of payment.
If the fair market value of the number of whole Shares transferred or the
number of whole Shares surrendered is less than the total exercise price of the
Option, the shortfall must be made up in cash or by check. Notwithstanding the
foregoing provisions of this Section 0, the consideration for Shares to be
issued pursuant to a Sale may not include, in whole or in part, the
consideration set forth in subsections 8.3.3 and 8.3.4 above.
9. EXERCISE OF OPTION.
9.1 PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option granted
hereunder shall be exercisable at such times and under such conditions as
determined by the Administrator, including performance criteria with respect to
the Company and/or the Optionee, and as shall be permissible under the terms of
the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under the Option Agreement and
Section 0 of the Plan. Each Optionee who exercises an Option shall, upon
notification of the amount due (if any) and prior to or concurrent with delivery
of the certificate representing the Shares, pay to the Company amounts necessary
to satisfy applicable federal, state and local tax withholding requirements. An
Optionee must also provide a duly executed copy of any stock transfer agreement
then in effect and determined to be applicable by the Administrator. Until the
issuance (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive dividends or any other
rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 0 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
9.2 TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. In the event
that an Optionee's Continuous Status as an Employee or Consultant terminates
(other than upon the Optionee's death or Disability) the Optionee may exercise
his or her Option, but only within such period of time as is determined by the
Administrator, and only to the extent that the Optionee was entitled to exercise
it at the date of termination (but in no event later than the expiration of the
term of such Option as set forth in the Notice of Grant). In the case of an
Incentive Stock Option, the Administrator shall determine such period of time
(in no event to exceed ninety (90) days from the date of termination) when the
Option is granted. If, at the date of termination, the Optionee is not entitled
to exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option with the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.
9.3 DISABILITY OF OPTIONEE. In the event that an Optionee's Continuous
Status as an Employee or Consultant terminates as a result of the Optionee's
Disability, the Optionee may exercise his or her Option at any time within
twelve (12) months from the date of such termination, but only to the extent
that the Optionee was entitled to exercise it at the date of such termination
(but in no event later than the expiration of the term of such Option as set
forth in the Notice of Grant). If, at the date of termination, the Optionee is
not entitled to exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
<PAGE>
9.4 DEATH OF OPTIONEE. In the event of the death of an Optionee, the
Option may be exercised at any time within twelve (12) months following the date
of death (but in the no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent that the Optionee was entitled to exercise the Option at
the date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after death, the Optionee's
estate or a person who acquired the right to exercise the Option by bequest or
inheritance does not exercise the Option within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.
9.5 BUYOUT PROVISIONS. THE ADMINISTRATOR MAY AT ANY TIME OFFER TO BUYOUT
FOR A PAYMENT IN CASH OR SHARES, AN OPTION PREVIOUSLY GRANTED, BASED ON SUCH
TERMS AND CONDITIONS AS THE ADMINISTRATOR SHALL ESTABLISH AND COMMUNICATE TO THE
OPTIONEE AT THE TIME SUCH OFFER IS MADE.
10. NONTRANSFERABILITY OF OPTIONS.
EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THE OPTION AGREEMENT, A[A]n
Option may not be sold, pledged, assigned, hypothecated, transferred or disposed
of in any manner other than by will, or by the laws of descent and distribution,
and may be exercised during the lifetime of the Optionee only by the Optionee
or, if incapacitated, by his or her legal guardian or legal representative.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
11.1 CHANGES IN CAPITALIZATION: Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and the number of shares of Common Stock which have been
authorized for issuance under the Plan but as to which no Options have yet been
granted or Sales made or which have been returned to the Plan upon cancellation
or expiration of an Option, as well as the price per share of Common Stock
covered by each such outstanding Option, shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.
11.2 DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution
or liquidation of the Company, each outstanding Option will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Administrator. The Administrator may, in the exercise of its
sole discretion in such instances, declare that any Option shall terminate as of
a date fixed by the Board and give each Optionee the right to exercise his or
her Option as to all or any part of the Optioned Stock, including Shares as to
which the Option would not otherwise be exercisable.
11.3 MERGER OR ASSET SALE. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each outstanding Option shall be assumed or an
equivalent option shall be substituted by such successor corporation or a Parent
or Subsidiary of such successor corporation, unless the Administrator
determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, that the Optionee shall have the right to exercise
the Option as to all of the Optioned Stock, including Shares as to which the
Option would not otherwise be exercisable. If the Administrator
<PAGE>
makes an Option fully exercisable in lieu of assumption or substitution in the
event of a merger or sale of assets, the Administrator shall notify the Optionee
that the Option shall be fully exercisable for a period of thirty (30) days from
the date of such notice or such shorter period as the Administrator may specify
in the notice, and the Option will terminate upon the expiration of such period.
For the purposes of this paragraph, the Option shall be considered assumed if,
following the merger or sale of assets, the Option confers the right to
purchase, for each Share of Optioned Stock subject to the Option immediately
prior to the merger or sale of assets, the consideration (whether stock, cash,
or other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets was not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation and the
Optionee, provide for the consideration to be received upon the exercise of the
Option, for each Share of Optioned Stock subject to the Option, to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.
12. TIME OF GRANTING OPTIONS.
The date of grant of an Option shall, for all purposes, be the date on
which the Administrator makes the determination granting such Option. Notice of
the determination shall be given to each Optionee within a reasonable time after
the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
13.1 AMENDMENT AND TERMINATION. The Board may amend or terminate the Plan
from time to time in such respects as the Board may deem advisable[; provided,
however, that if required to qualify the Plan under Rule 16b-3 promulgated under
Section 16 of the Exchange Act no amendment shall be made more than once every
six months that would change the amount, price or timing of the option grants,
other than to comport with changes in the Code or the rules and regulations
promulgated thereunder; and provided, further, that, if required to qualify the
Plan under Rule 16b-3, no amendment shall be made without the approval of the
shareholders of the Company in the manner described in Section 0 of the Plan if
the amendment would:
13.1.1 increase the number of Shares subject to the Plan, other than
in connection with an adjustment under Section 0 of the Plan;
13.1.2 make a change in the designation of the class of Employees or
Consultants eligible to be granted Options; or
13.1.3 if the Company has a class of equity security registered under
Section 12 of the Exchange Act at the time of such revision or amendment,
cause any material increase in the benefits accruing to participants under
the Plan].
13.2 SHAREHOLDER APPROVAL. The Company shall obtain shareholder approval
of any Plan amendment to the extent necessary and desirable to comply with Rule
16b-3 or with Section 422 of the Code (or any successor rule or statute or other
applicable law, rule or regulation, including the requirements of any exchange
or quotation system on which the Common Stock is listed or quoted). Such
shareholder approval, if required, shall be obtained in such a manner and to
such a degree as is required by the applicable law, rule or regulation.
13.3 EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted, and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Administrator, which agreement must be in writing and signed by the Optionee
and the Company.
<PAGE>
14. CONDITIONS UPON ISSUANCE OF SHARES.
Shares shall not be issued pursuant to the exercise of an Option or a Sale
unless the exercise of such Option or consummation of the Sale and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, applicable state securities laws, the Exchange Act, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange
(including NASDAQ) upon which the Shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
15. RESERVATION OF SHARES.
The Company, during the term of this Plan, will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
16. LIABILITY OF COMPANY.
16.1 INABILITY TO OBTAIN AUTHORITY. Inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
As a condition to the exercise of an Option or a Sale, the Company may
require the person exercising such Option or to whom Shares are being Sold to
represent and warrant at the time of any such exercise or Sale that the Shares
are being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required by any of the aforementioned relevant
provisions of law.
16.2 GRANTS EXCEEDING ALLOTTED SHARES. If the Optioned Stock covered by
an Option exceeds, as of the date of grant, the number of Shares which may be
issued under the Plan without additional shareholder approval, such Option shall
be void with respect to such excess Optioned Stock, unless shareholder approval
of an amendment sufficiently increasing the number of Shares subject to the Plan
is timely obtained in accordance with Section 0 of the Plan.
17. SHAREHOLDER APPROVAL.
Continuance of the Plan shall be subject to approval by the shareholders of
the Company within twelve months before or after the date the Plan is adopted.
Such shareholder approval shall be obtained in the manner and to the degree
required under applicable federal and state law.
[18. SIX MONTH HOLDING PERIOD FOR AFFILIATES.
If the Company registers any class of any equity security pursuant to
Section 12 of the Exchange Act, then from the effective date of such
registration until six (6) months after the termination of such registration
(the Public Period), these limits will apply to each Officer, Director and
beneficial owner of ten percent (10%) or more of any class of equity securities
of the Company (Affiliates.) During the Public Period, any Affiliate shall hold
Shares Sold hereunder at least six months from the date of Sale. During the
Public Period, at least six months must elapse from the date of grant of an
Option to an Affiliate to the date the Affiliate disposes of the Shares acquired
upon exercise of the Option, or (if the Option is disposed of other than by
exercise) to the date of disposition of the Option itself.]
<PAGE>
Northwest Pipe Company
12005 N. Burgard
Portland, Oregon 972003
phone 503-285-1400
fax 503-240-6615
April 14, 1997
United States Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Re: Northwest Pipe Company
Filing of Definitive Proxy Statement
Ladies and Gentlemen:
Enclosed for filing on behalf of Northwest Pipe Company (the "Company") is the
Company's definitive proxy statement and form of proxy, the proxy card, and the
proxy statement cover sheet. The Company intends to release its definitive proxy
materials to its shareholders on or about April 14, 1997.
The 1996 Annual Report to Shareholders will be filed, for informational purposes
only, in paper format since no parts of such Annual Report are incorporated by
reference into the Definitive Proxy Soliciting materials.
A copy of the Company's 1995 Stock Incentive Plan which is proposed to be
amended at its annual meeting of shareholders, is included as Appendix A in the
proxy statement. The Company confirms that, following approval of such
amendment, which increases the number of shares available for issuance
thereunder, the Company will file a Registration Statement on Form S-8 with the
Commission prior to the grant of such options and issuance of such shares
thereunder.
Very Truly Yours,
Brian W. Dunham
Executive Vice President, Chief Operating Officer,
Secretary and Treasurer
<PAGE>
- -------------------------------------------------------------------------------
NORTHWEST PIPE COMPANY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 22, 1997
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement, each dated April 10, 1997 and
hereby names, constitutes and appoints William R. Tagmyer and Brian W.
Dunham, or each of them acting in absence of the other, with full power of
substitution, my true and lawful attorneys and Proxies for me and in my place
and stead to attend the Annual Meeting of the Shareholders of Northwest Pipe
Company (the "Company") to be held at 9:00 a.m. on Thursday, May 22, 1997 and
at any adjournments or postponements thereof, and to vote all the shares of
Common Stock held of record in the name of the undersigned on March 21, 1997,
with all the powers that the undersigned would possess if he were personally
present.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
- -------------------------------------------------------------------------------
Please mark
your votes as X
indicated in
this example
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to (to vote for all
the contrary below) nominees listed below)
1. PROPOSAL 1 - Election
of Directors. / / / /
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST BELOW.)
BRIAN W. DUNHAM WAYNE B. KINGSLEY
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE NOMINEES
NAMED ABOVE.
2. PROPOSAL 2 - To approve ammendments to the FOR AGAINST ABSTAIN
Company's 1995 Stock Incentive Plan. / / / / / /
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
PROPOSAL 2.
3. PROPOSAL 3 - To ratify the appointment of / / / / / /
Coopers & Lybrand L.L.P. as the Company's
independent auditors for the year ending
December 31, 1997.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
PROPOSAL 3.
4. Upon such other matters as may properly come before, or incident to the
conduct of the Annual Meeting, the Proxy holders shall vote in such manner
as they determine to be in the best interests of the Company. The Company
is not presently aware of any such matters to be presented for action at
the meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF THE COMPANY. IF NO SPECIFIC DIRECTION IS GIVEN
AS TO ANY OF THE ABOVE ITEMS, THIS PROXY WILL BE
VOTED FOR THE TWO NOMINEES NAMED IN PROPOSAL 1 AND
FOR PROPOSALS 2 AND 3.
I DO / / DO NOT / / PLAN TO ATTEND THE MEETING.
(PLEASE CHECK)
Shareholder (print name)
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Shareholder (sign name)
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Dated
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The shareholder signed above reserves the the right to revoke this Proxy at any
time prior to its exercise by written notice delivered to the Company's
Secretary at the Company's corporate offices, 12005 N. Burgard, Portland, Oregon
97203, prior to the Annual Meeting. The power of the Proxy holders shall also be
suspended if the shareholder signed above appears at the Annual Meeting and
elects in writing to vote in person.
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FOLD AND DETACH HERE
